The place of supply in the UAE

What is a place of supply?

The place of supply is the place where the supply has taken place and is identified to determine if tax should be applied to the supply or not. The conditions for tax liability differ for the supply of goods and services. Let's see how we can determine the place of supply of goods under VAT, and the place of supply of services under VAT.

Place of supply of goods under VAT

The place of supply of goods is the location of the goods when the supply occurs. There are 3 categories for determining the place of supply of goods:
• Domestic supplies: When the supply is made within the country from one emirate to another, the place of supply is the UAE.
• Exports to outside the GCC: When the finished goods are declared for export in the UAE to a non-GCC country, the place of supply is the UAE.
• Intra-GCC supplies: When the finished goods are transported from the UAE to another GCC country, the place of supply depends on whether the recipient is a VAT-registered business:
  • If the recipient is a VAT-registered business: The place of supply is the recipient's location, as it is the final destination of the exported goods. The recipient is required to apply reverse charge VAT on the taxable supplies.
  • If the recipient is not a VAT-registered business: The place of supply depends on whether the supplier exceeds the VAT export threshold.
    • If the total amount of exports by the supplier is below the mandatory registration threshold in the recipient's state, the place of supply is the UAE and the UAE VAT should be paid.
    • If the total amount of exports by the supplier is above the mandatory registration threshold in the recipient's state, the place of supply is the destination state and VAT should be paid in that state.

Note: Special rules apply for the place of supply during a cross-border transaction, the supply of water and energy, and the supply of real estate.

Place of supply of imports

• Import of goods into the UAE: The place of supply for imported goods is the state where the goods are consumed. If a business based in the UAE imports goods from another state, the place of supply is the UAE, and the supplier should apply reverse charge VAT.
• Imports of goods into the UAE, to be re-exported to other GCC countries: If goods are imported to the UAE to be transported to another GCC country, the importer should pay VAT without using reverse charge and the import VAT can only be recovered in the GCC state where the goods have been transferred.
• Imported goods into the UAE, and later on exported to another GCC country: If a recipient expects that the imported goods will stay in the UAE but later on exports them to another GCC country, the importer in the UAE should pay VAT then the final importer should repay import VAT in their state.

Place of supply of services under VAT

The place of supply for services provided by a taxable supplier is the location of the supplier.

There are a few exceptions for the place of supply of services:
• Imports from outside of the GCC: When the supplier is a non-UAE resident providing services to an UAE-based VAT-registered business, the place of supply is the UAE.
• Installations: The place of supply for installations is where the installations are located.
• Real estate-related services: The place of supply for real estate agents and experts, construction work services, granting the right to possess real estate, is where the real estate is located.
• Hotel and restaurant services: The place of supply for hotels and restaurants related services is where the services are performed.
• Electronically-supplied services and telecommunication: the place of supply is where these services are used or received.
• Cultural services: the place of supply for art, educational, or sports services is where the services are performed.
• Passenger-related transportation services: The place of supply for such services is where the transportation begins.

Note: Special rules apply to the place of supply during a cross-border transaction and the supply of electronic services.